BANKRUPTCY NOTICE

Rahman to be advised whether he has any ground to set aside the Bankruptcy Notice and
opposed the Creditor’s Petition served by Sri Murni Sdn. Bhd. on the following grounds and
procedure to set aside Bankruptcy Notice and Creditor Petition.

1. Where Rahman has a counter-claimed pursuant to section 3(1)(i) of the Insolvency Act
1967; this section emphasizes that the land must be equal to or exceed the amount claimed
and that no action in which judgment has been obtained can be taken. On the fact that
Rahman had a counter-claimed in the default judgment claimed RM200,000 which is equal
to the value of RM200,000.

2. In the case of Re Bankruptcy Notice (1934) c.431; Re A Debtor (1914) 3 KB 726 held that
if the debtor had one or more of the above, he showed:
a. that the amount claim was equal or exceeded;
b. that it could not be identified in the case in which the judgment was obtained;
c. that the essence of the claim had to be specified in the affidavit and that it had to be
quantified and put in good faith and has a reasonable prospect of success.
Applying to the case, Rahman failed to file within seven days, but section 3(1)(i) of the
Insolvency Act 1967 provided that if he fails to comply seven days unless he satisfies the court
that he has a counterclaim equal to the sum set out in Judgment Debt. Rahman should file an
affidavit of the procedure to set aside claims that he has such an argument equal to that of Sri
Murni (Rule 95 BR 1969). The duration of time needed to file an affidavit is 7 days.
Accordingly, Rahman should have objected at the Bankruptcy Notice stage and not at Creditor
Petition by submitting an affidavit-supported summons in chambers under rule 18 BR 1969.

In MBB v Datuk Lim Kheng Khim (SC) where the debtor denying and challenges the amount
owed, he may request that summons be set aside in chambers backed by an affidavit as provided
by Rule 18 BR 1969 and not by an affidavit under Rule 95 BR 1969. The application may be
sent within 7 days or afterwards. Since the counter-claim is similar to what Sri Murni Sdn Bhd
says, there is a cause to object.

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3. A surplus sum in Bankruptcy Notice - the Creditor Judgment is required to strictly comply
with the terms of order or Judgment. About the sum claimed as RM275,000 instead of
RM200,000, section 3(2)(ii) the Insolvency Act 1967 would be the sum claimed as resorting.
Must object Creditor Petition stage as in Dato Hj. Muhammad Bin Hamzah v Public
Bank; Re Arunachalam; and D&C Bank v Datuk Ong Kian Seng at the Bankruptcy
Notice stage. As far as the case is concerned, Rahman did not do so at Bankruptcy Notice
stage and therefore this question cannot at this point be a basis for opposition to the Creditor
Petition .

4. Non quantified interest - from the date of judgment, the Bankruptcy Notice notifies 12 per
cent per annum and costs the sum of RM15,000. Section 3(1)(i) the Insolvency Act 1967
includes quantification of the interest before Bankruptcy Notice’s issue date. The Supreme
Court held that such Bankruptcy Notice is bad in Ghazali Mat Noor and in Fauzia Osman
case. The judgment creditor should estimate the interest, and not to determine the amount for
the judgment debtor. Bankruptcy Notice's demand must be absolute and reasonable and the
decision must know at once how much it has to pay because it has very little time to comply
with the Bankruptcy Notice. At Bankruptcy Notice point Rahman will oppose it.

a. Irregularity of Bankruptcy Notice regarding service and validity of Bankruptcy Notice -

The irregularity of service that Sri Murni served the Bankruptcy Notice to Rahman 's
wife Jelita. BR 1969 Rule 97, 109 and Rule 111 stipulated that Bankruptcy Notice must
be personally served to Rahman and must be proved by an affidavit. Sri Murni may apply
for substituted service in compliance with Rule 110 BR 1969, for substitute service to
succeed the court must be satisfied that personal service is unlikely as Rahman can evade
or the substitute service method sought is successful in informing Rahman and Sri Murni
has not complied with the procedure Note 1/68. In this case, the service is bad and will be
ground to set Bankruptcy Notice aside and also ground against the petition to challenge
or show cause.
b. The validity of the Bankruptcy Notice issued on 4th December 2019 and served on 1st
May 2020 is against the rule 96 BR 1969 that stipulated the duration of the Bankruptcy
Notice is three months from the date of issue. If Sri Murni wants to extend the validity

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 period Sri Murni may apply to the court but this was not done and the Bankruptcy Notice
has been expired when it served. It is to be noted that this kind of irregularity is serious
according to the section 6 the Insolvency Act 1967 and rule 106 of BR 1969, and it is the
ground to challenge of Bankruptcy Notice and Creditor’s Petition stage as well.

On the irregularity of Bankruptcy Notice is the ground other than the counterclaim, that
proceed under rule 18 BR 1969, Rahman shall apply by way of Summon in Chamber
supported by Affidavit in Datuk Lim Kheng Kim v MBB . This application can be done in
the stage of Bankruptcy Notice.

5. That the summary judgment obtained is not final. According to the section 3(1)(i) of the
Insolvency Act 1967 provides that a definitive judgment or order has to be obtained by the
creditor. A final judgment or order is one which eventually disposed of the parties' rights and
this shall include a judgment in default not set aside and a summary judgment not set aside or
appealed against as in Re Udos Ak Rigging was held JID is not a final judgment as JD has
applied to set it aside. If JD has not applied to set it aside within the time period, then the JD
would crystalise into a final judgment. Meanwhile in Michale Kho Miang How court held
that filing of an appeal renders the lower court’s judgment as not final.

Sri Murni secured summary judgment against Rahman on the facts he did not file an appeal.
The summary judgment thus constitutes a final judgment within the context of Section 3(1)
(i) the Insolvency Act 1967. Hence Rahman cannot challenge the Creditor’s Petition.

6. The next question is whether the completion of the Creditor’s Petition on 9 July 2020 will be
the basis for disputing the petition.
a. The Creditor’s Petition must be presented within 6 months after the act of bankruptcy
pursuant to section 5 the Insolvency Act 1967.
b. On the facts, the act of bankruptcy was committed on 12th May 2020 after 7 working day
from 1st May 2020 the Creditor’s Petition was served 9th July 2020.
c. Since the Creditor’s Petition was served with 6 months, Rahman has no ground to
challenge the issue in Creditor’s Petition stage.

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7. If the Affidavit of Truth of Petition issued on 7 July 2020 before the presentation of the
Creditor’s Petition on 9 July 2020 could be rooted in opposition to or challenge Rahman's
Petition.
a. In Sobri Arshad v Associated Tractor Sdn Bhd that affidavit to verify creditor’s
petition was affirmed 1 day before the presentation of the petition, held the petition is
nullified and cannot be cured by section 131 the Insolvency Act 1967.
b. In Koh Kim Kuang v MBF Finance Bhd, the petition was confirmed by affidavit that
had been affirmed before the petition was filed. Court held that section 6(1) BA 1967 and
Rule 106 BR 1969 stipulate that the petition of a creditor shall be confirmed by affidavit,
but shall not prescribe the time for confirmation of the affidavit. The petition lodged here
is valid.
In conclusion, the decision in Koh Kim Kuang v MBF Finance Bhd is followed, then the
petition is valid and Rahman cannot oppose the Creditor’s Petition.

Finally, Rahman to be explained the procedure for showing cause against the petition according
to Rule 117 BR 1969 when a debtor wants to show cause by filing a notice in Form 16 with the
Registrar stating the claims in the petition that he wish to deny or challenge and send a copy of
the notice to the petitioner (Creditor and his solicitor) 3 days before the petition hearing. The
notice to be supported by affidavit, however, an affidavit in opposition is held not a notice under
rule 117 which is mandatory and is not curable under section 131 the Insolvency Act 1967.

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